I recently discovered this financial counselor on Fox Business News. Great stuff to get out of and stay out of debt forever. Simple concepts in simple terms. In a nutshell:

1) Establish a $1,000 emergency fund (now you can destroy credit cards)
2) Payoff all consumer debt (debt snowball)
3) Establish complete emergency fund of 3-6 months expenses
4) Save at least 15% of pre-tax earnings towards retirement
5) Save towards children's college fund
6) Payoff mortgage debt
7) Build wealth

http://www.daveramsey.com/

Details on how to accomplish each step can be found in his books Financial Peace or The Total Money Makeover. These books are currently on sale for $10 on his website.

No, I'm not an employee of his. Just a guy who finally saw the light, implemented the program, and am on the way to a debt-free, wealth-building lifestyle.

Good luck.

Good luck getting todays society to abide by those rules. If that were the case we wouldn't be in such a mess right now.

Is he the guy who came up with the waterfall/snowball idea?

Solid advice there, can't go wrong with those suggestions. My wife (soon to be separated) has put me in debt when I shouldn't be, so I'm putting those sorts of strategies to work.

Don't you see that it's MORE likely that people will start abiding by this advice given economic times?

Definitely validity to this point. But more and more people are "seeing the light" at least in the circles I run in. A bad economy doesn't impact the regular guy that much if that guy doesn't have payments.

Sure, but it's still annoying when government is doing everything in it's power to prop up spending.

Dave Ramsey system is simple, but effective.

The key here is really the removal of consumer debt. (Credit cards, autos, etc)

If you scrimp and save and pay it all off as quickly as humanly possible, and then CANCEL THE CARDS, you'll find yourself with so much extra money for investing.

The emergency fund is also a magical thing. I'm not a baller so I only have $5k in mine while I finish paying off debt, but it's nice knowing that if my furnace takes a **** or something, I can just pay cash.

Spending isn't the issue. Buying on credit and living beyond your means are the real issue. The government obviously doesn't get it and most likely won't ever.

My little sister is doing this right now to pay off her student loans. It really does work well when you commit to living frugally and your number one drive in life is to get out of debt.

Well, spending is an issue if you're not saving. You need the emerg fund and to save on top of that...and then spending more than you make is even worse.

The thing is that you often should NOT cancel the card (just cut them up and never use them again if you don't have restraint). Canceling the credit history is a terrible idea. However, that's only if there's no annual fee...if there's a fee, and you're not getting benefits from it that outweigh the fee, then by all means cancel it.

A neat and effective tip for people who just graduate is to keep living at that student standard of living even after you land the fancy job for a couple years because you'll have SO much extra income that you can pay down even large debts quite quickly. Then you get your 6months living expenses (at the level to which you aspire...not the student level) and THEN you can increase your standard of living (provided that you still plan to save 10-15% of pretax income at that new level.

That's a prescription for laughing all the way to the bank and retirement (often at a very early age...like 45-50 if you so choose).

True, but having $30k available on credit cards can also be a negative to many lenders, right?

With all due respect, you're missing the point. You don't care about lenders or the almight FICO score under the Ramsey doctrine. You aren't borrowing money for cars, school, boats, etc. You are paying CASH. The only "acceptable" borrowing is a mortgage loan on which you are putting down at least 20% with a payment no more than 25% of your net income.

There are budgeting tools on his website that specifically incorporate savings for things like college, a replacement unit for your current vehicle, etc.

Funny thing. I discovered this guy in November while sitting on my couch after getting laid off from my sub-prime lending job. My wife and I were already in decent shape relatively speaking with "only" $10,000 in consumer debt. We have paid that down to $7,500 in one month while I have been on unemployment. I got a second part-time night job and put his philosophy in place. We'll be debt free in 3 months even if I don't find a job in the meantime (I do have a second interview today and things are looking good.).

This plan works.

You must have been spending like a maniac before if you're making up so much ground on less income. Was that the case?

Ummm...what about HOUSES? You still need good/great credit to save on mortgage interest! That's why you don't cancel the cards, but cut them up.

edit: I'm sorry, I didn't see that you mentioned mortgages. But yeah, still don't cancel cards if you can avoid it. Drop limits, by all means...because having too much available credit is bad...but canceling a card you have a long history with is much worse than keeping the card and dropping it to the minimum (then cutting up the card if you never plan to use it).

Oh they get it alright. They WANT this culture to continue. DUCY?

You got it. Spent every cent we made. Ate out 3-4 times per week, had steak the 2-3 times a week we ate at home, blew a couple hundred a week in tournament fees at the local casinos, spend $500/month on gas (most of which was the 100+ mile round trip to the aforementioned casinos, etc). It really adds up.

We also, per the Ramsey plan, stopped all 401(k) contributions (about $600 of the amount we paid off) until we reach that step in his plan (step 4 - immediately following elimination of all consumer debt). I stopped 529 contribution (college fund) until that step is reached.

By establishing a detailed, written budget and giving every dollar a name (home), we really became more conscientious about where we spend money. We also began using cash almost exclusively by utilizing the envelope system described in his books. For example, when the cash in the "restaurant" envelope runs out, you eat at home. We actually went completely Nazi on this thing and spend absolutely no money on anything no absolutely necessary. Short term pain = long term gain. And, yes, we are exhanging only cards for Christmas and our annivesary in January. Only the kids are getting presents and those will be modest and we've explained to them why.

I have 3 more payments left on my leased vehicle. I've dropped about $13k in payments on this thing for the privelege of returning it to the manufacturer with nothing to show for it. I'll be paying cash for a beater until there is ample funds in the "car replacement account" to pay cash for something a little nicer. Funny thing is, I don't even care what kind of car I'll drive. It'll be paid for and I'll be flush in cash.

Cwilli...congratulations, seriously. One of the big contributing factors to my separation/divorce is that although she'd pay lip service to being on the same page as me, she just wouldn't have her actions match her words.

Canada has a very popular show called Till Debt Do Us Part (go to www.gailvazoxlade.com for tonnes of resources and a very very good blog). She advocates basically the same stuff - jars of cash, detailed budget, etc etc.

I always thought the cash envelope system was silly, but the more I think about it, the more I see the wisdom.

So did I. But I drank the Kool-Aid and it is amazing how well it works. I'm guessing that after a few months of literally using the envelopes, I will be able to go back to using the debit card and monitoring the spending using the budget and checkbook register. It really is hard to part with cash money. Not as hard to swipe a credit or debit card.

To confess, I still have 2 credit cards. One carrying the $7500 in debt I owe at 4.9%. The second is one I used for free airline travel (yes, I've actually received 3 roundtrip tickets from using the card on Frontier). I will close the one with the balance when the balance is paid off. I have yet to decide about the other one.

Ramsey's ideas sell well now. But dig into his history and you will find an over leveraging lifestyle. And if most Americans quit spending, the entire country would crumble. If you think unemployment is high now, remove 50% of consumer goods along with the workforce that sells them. Shut down 80% of the restaurants and bars. Who will be the first to volunteer to return to a pauper style lifestyle when the rest of the world moves to upper class? Take India for example, its just in the last ten years they have entered into a credit banking system. Prior to, all goods were purchased with cash. No mortgages. No loans.

I agree with the maintain a student lifestyle creed. I just don't think it will make an impact.

An impact on what? The examples that I've seen are startling. You're a student and you spend maybe 1500/month max. You get a 50k/year job, and you still spend 1500/month. While you were a student, you might not have been able to put together any substantial savings. 1500/month is 18k/year. You work 50k and bring home maybe 38k after taxes (including tax refund)...now you've got 20k to save/YEAR! WOW! How is that not an amazing impact?!

On your other point: I think that's a lesson for the capitalist west - the economic model is cancerous. It's unsustainable (it's sustainable, but at the cost of people's well-being)...so at best it can be said to be sub-optimal, but in a prescriptive sense: it's so deficient that things should change. Any economy built on consumption is bad and doomed to fail. You can sustain SOME consumption, but not anywhere remotely close to what the west (specifically the US and slightly less Canada).

You don't need seven steps to be debt free:

http://consumerist.com/consumer/clip...ord-252491.php

An impact on changing the current mess. That person with the new job now has higher expectation to spend as the marketing is built to separate him from his cash. The casino of life has programmed Americans to spend, spend, spend. Seriously, how many different brands of jeans does a society really need? Or burger stands, car companies, electronics retailers? 1 shopping mall has 10 different retailers selling the same product, for usually the same price. Spending is like the fish in a bowl, the bigger the bowl, the bigger the fish.

Capitalism could be equated to entrepreneurial startups. Great at moving an idea towards a market position. But lousy as a long term manager. I agree with your point that capitalism is doomed to eventual failure. And that the American's will go down the tubes trying to prove their system works.

Well, I think the major impact is along the lines of a tipping point...if enough people did it and realized how much better their lives would be the USA (and, therefore the WORLD) would be drastically different (and drastically better) place. Utopia heck no, but probably a whole lot closer than we think. Again, not a rag on 'capitalism' but perhaps one on a consumerism-dependent capitalism....